Trying for a short sale but think we don't know what we are doing! *LONG*

[confusedandlost]

Let me apologize in advance for this being very long, but I'm not sure where else to turn to.

In September 2005 we purchased a home in California for $480,00. SIL and BIL put down $90,000 by taking out a second mortgage on their own house. I along with husband and another BIL (I"ll call him BIL2) moved into this house. The house was on the four of their names, we were not married then so it was just them. The plan was to stay for two years, we had a baby at the time and the area was not where we wanted to live but the only place we could afford. Then the house would be sold and profits split, yeah that went well!

Our loan was a sub prime loan that reset in November of 2007, so at that time we made the decision to try and stick it out, since the market was already tanking and refinance. We went through a friend of twenty years and he turned around and totally scammed us. He switched out paperwork at the last minute and without us knowing took husband and BIL2 off the loan. He charged us a huge amount driving our principle up high enough to require a jumbo loan. Worst of all though our new loan is the kind where it adds on to the principal every month. He had separate meetings with us and with SIL and BIL so they thought we were in a different kind of loan and we thought they knew. Took almost a year for us all to get on the same page about what happened, great communication in our family! No one wants to go after the guy by the way, although I think we should.

So this gets me to current times, we now owe $450,000 and still growing. Houses in our neighborhood are selling for around $100,00. The house like I said is now totally on SIL and BIL names. We want out of the house so they agreed to take the hit of a short sale on the credit. I suspect though that they are not getting good advice. My brother (who would not show up as a relative) want to purchase the house for $100,000 or less. Real estate agent has advised that all we need to do is submit the offer and makes it sound like a piece of cake. From my research that sounds wrong to me.

So I have a few questions from this. Is there a chance there is some loophole the real estate agent knows about and it is that simple? We have Aurora Loan Services. Has anyone even heard of the lender agreeing to such a drastic short sale? Is a short sale even the best course or would of a foreclosure be better? BIL is supposed to be consulting a tax guy but what are the approximate tax ramifications? BIL and SIL also own their own home, could that house be at risk? We also just skipped our first loan payment, was that smart to do or should we have waited? (could still get it in) I'm also not sure if the SIL and BIL can show a drastic financial hardship will this affect the outcome? I'm saying we need to get a lawyer, anyone want to back me up?

I think that's it! I just feel so desperate, I never imagined our house loosing so much value and we have kindergarten registration in 7 months and need to get into a good school district, wish the lender would listen to that! Thank you soooo much in advance for any help!

[Dan Bailey]

confused,
Glad you found the forum and posted.

First off...your real estate agent is full of it. It is no piece of cake. Most every lender will require you to have the home up for sale for at least 90 days before considering a short sale.

The decision to accept a short sale offer is up to the lender, according to the criteria set by the investor behind the loan. It is doubtful that they would go for that much of a reduced price.

The lender does not care what school district your child goes to, they wil not see that as a hardship-you are correct in that asumption.

I would second your desire to seek a good real estate/financial attorney, if for nothing else than to find out the tax and credit ramifications.

[Dan Bailey]

Also, if you look above the threads in this section, you will see "stickeys" with information about aproximate ramifications with taxes, liens, etc.

[csb2008]

Hello confusedandlost,
Just a short note to make you feel better, I myself had a loan with Aurora Bank! very hard to deal with!!
I used this forum, but no one really had a contact with this particular company. Anyway, I did have my house listed for awhile, I went thru (2) realtors until I found someone who knew what they were doing, and did alot of homework!! and finally after dealing with this since last October my escrow closed last week with a short sale in tact !!
There is an end to your nightmare ! Please be patient list your house with a good realtor who knows short sales after you have consulted with the attorney the above gentlemen suggested, keep going and you to will be at peace like me finally.
Good Luck, you will need it
CSB